FTSE slightly down

The London market brushed aside a fresh scare on interest rates today before succumbing to a late sell-off as oil and mining stocks weakened.

The FTSE 100 Index clung to its opening mark for much of the session, but eventually closed 47.8 points lower at 6215.7.

Miners dominated the fallers’ board after a drop in commodity prices caused stocks to decline by between 2% and 4%. Antofagasta was the worst affected with a fall of 17p to 449p while Lonmin retreated 26.5p at 712.5p.

And with oil prices moving closer to 50 US dollars a barrel in New York, BP fell 8p to 541p and Royal Dutch Shell slipped 13p to 1715p. The pressure on BP was heightened by a critical report on safety procedures at its US refineries, including the Texas site where 15 workers died in an explosion.

Tate & Lyle was among other commodity-led fallers, easing 26.5p to 712.5p after sugar prices fell to a low for the past year and Credit Suisse cut its price target on the stock.

Earlier in the session official figures showed inflation hit 3% last month - the highest level for a decade. It raised the prospect of a fourth rise in interest rates since August but the market brushed that threat aside with the help of further gains by Smiths Group.

Smiths followed yesterday’s rise of 11% with gains of 18p to 1112.5p today as investors continued to welcome the sale of the company’s aerospace division to General Electric for £2.5 billion. Smiths also benefited from an upgrade by UBS.

It was joined on the leaderboard by Scottish & Southern Energy after reports suggested the power supplier had rejected a takeover approach. The stock was up 34p at 1560p.

Tesco lost earlier gains to close 4.25p lower at 415.5p, even though the supermarket chain underlined its dominance with another strong Christmas trading performance. Like-for-like sales increased 5.9%, up from the rate of 5.6% seen in the third quarter.

B&Q owner Kingfisher was also lower after Standard and Poor’s cut its debt rating and Lehman Brothers reduced its earnings forecasts. The double blow caused shares to dip 2%, or 5p to 232.5p.

Retailers were also impacted by interest rate worries, as Argos owner Home Retail Group fell 11.75p to 408.25p, Marks & Spencer dipped 12p to 680p and Next eased 33p to 1918p.

Northern Foods lost recent gains – easing 5% or 6p to 113p – despite reporting a solid performance in the run-up to Christmas.

And shares in Debenhams dived almost 7% lower after underlying sales fell over the festive period. Debenhams said sales of clothes were weaker than expected and the stock slipped 12.75p to 171p.

The biggest Footsie risers were Scottish & Southern Energy up 34p at 1560p, Smiths Group ahead 18p at 1112.5p, Yell Group up 7.5p at 603.5p, BAE Systems ahead 4.5p at 430p.

The biggest fallers were Antofagasta down 17p at 449p, Tate & Lyle off 26.5p at 712.5p, Lonmin down 91p at 2857p and Vedanta Resources off 32p at 1100p.